Raymond comes under minority shareholder's fire

Vishal Patel accuses company's promoters of siphoning off funds for personal use

A minority shareholder of Raymond has alleged that the company's promoters have siphoned off funds from the BSE-listed company for their personal use by buying expensive jets, yachts and constructing a huge mansion in South Mumbai for their personal use.

In an open letter published today, shareholder Vishal Patel said the Singhanias did not inform the shareholders about the commercial aspect of the South Mumbai real estate project, which was embroiled in controversy. The company has violated municipal rules while spending Rs 186.7 crore as of March 31, 2016 on redeveloping the property, Patel said. 

When contacted, Raymond did not comment on the issue but few days earlier Chairman Gautam Singhania had tweeted that one Bharat Patel is trying to blackmail the company and he was arrested but received a bail on medical grounds. Bharat Patel and Vishal Patel are related.

Patel said the  independent directors turned a blind eye on allowing capital and operating expenses of assets like boats and aircraft which was charged to the company. The company owns boats and yachts worth Rs 72 crore. It owns aircraft worth Rs 114 crore. The shareholder said the company had been charged 133 crore in depreciation in last 9 years for boats and yachts. 

Another Rs 117 crore was charged for depreciation of aIrcrsft in the last 10 years. The Singhanias owns 42% stake in the company. 

The letter said the auditors should separately disclose this to small shareholders instead of cleaverly disguising it as "miscellaneous" expenses.

According to the letter, the company had a net profit of Rs 197.2 crore in the last 10 years, while in the same period it has charged Rs 327.8 crore as expenses for the assets and additionally Rs 56.17 crore was paid as remuneration to the promoters. Patel said Chairman Gautam Singhania’s salary rose 33.7 percent in the financial year (FY) 2015-16 to Rs 11.39 crore.  

"The board of directors owe to the stakeholders an explanation and justification towards the rationale for the above project," Patel said asking the company to change its registered office from a inaccessible place in Ratnagiri to Mumbai so that small shareholders can attend the company's annual general meeting.